Personal Care Helps Buoy Unilever Q1 2014 Results

Posted: April 24, 2014

Unilever shared its trading statement for the first quarter of 2014, marking that the global FCMG company is seeing “a good starting to 2014.” Highlights from its results include underlying sales growth of 3.6%, with emerging markets up 6.6%, and underlying volume growth up 1.9% while pricing is up 1.6%. Also, turnover decreased 6.3% to €11.4 billion, reflecting a negative currency impact of (8.9)%.

Unilever CEO Paul Polman said of the results, “We delivered good growth in the first quarter despite slowing markets and a tough competitive environment, further evidence that Unilever is now delivering consistently ahead of our markets. We saw a continuation of the competitive performances in home care and personal care and a strong start to the year in refreshment. The decline in foods was largely explained by the later timing of Easter, and I am confident that we are now taking the right actions to improve performance. We continue to deliver strong, margin-accretive innovations while embedding operational discipline across our markets. At the same time, we are increasing our distribution reach and enhancing the capabilities of our people to ensure that we have a strong foundation from which to deliver sustained growth. Emerging markets are currently passing through a period of slower demand and economic volatility, but our strategy remains unchanged. We continue to invest in our brands so that they are well-placed to benefit from the significant longer term growth opportunity that will come from growing populations and higher disposable income. We remain focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow.”

For its personal care division’s first quarter of 2014, Unilever recorded turnover of €4.2 billion, underlying sales growth of 4.5% and underlying volume growth of 2.7%. According to Unilever, personal care grew ahead of markets driven by a strong innovation program. Deodorants performed well, with the successful compressed aerosol format extended to new markets in Europe and the launch of the premium Advanced Care range for Dove in the United States. In skin, the performance of Lux has stepped up, underpinned by a major relaunch in China and South East Asia. Dove Nutrium Moisture shower gels also continued to drive growth across its markets. Vaseline Spray & Go made good progress in existing markets and was extended to Australia. In hair, the Dove Advanced Hair Series was launched in the United States and TRESemmé 7 Day Smooth was introduced in the United Kingdom and the United States. The company also launched dry shampoos under the Elidor brand in Turkey. And capitalizing on the growth of male personal care products, in oral Unilever launched Signal White Now Men, its first toothpaste specifically designed for men.

Geographically, in its Asia/AMET/RUB region, growth was ahead of its markets, and Unilever saw strong performances in China, Turkey and Indonesia and a marked improvement in Japan. Russia was weak, reflecting the soft market conditions, but the company’s personal care brands continued to grow ahead of the market. South Africa grew despite weak markets and intense competition.

For the Americas, North America declined despite competitive growth from the personal care brands. The key drivers of a decline in foods were the timing of Easter, the decline of the margarine market and weak sales in dressings. Latin America delivered another quarter of strong growth, and the company made good progress despite the difficult macroeconomic conditions. It also saw good volume growth ahead of its markets coupled with strong price growth reflecting action take to respond to higher input costs.

Europe was broadly stable in the first quarter, a good performance given the sluggish markets. Broad-based growth in ice cream, personal care and home care was largely offset by a decline in foods. The key markets of United Kingdom and Germany grew ahead of their respective markets. A return to growth in Greece and Spain underlines the improving conditions in southern Europe.